A B C D E F G H

A

Actuarial Value

The percentage of total average costs for covered benefits that a plan will cover. For example, if a plan has an actuarial value of 70%, on average, you would be responsible for 30% of the costs of all covered benefits. However, you could be responsible for a higher or lower percentage of the total costs of covered services for the year, depending on your actual health care needs and the terms of your insurance policy.

Affordable Care Act (ACA)

The comprehensive health care reform law enacted in March 2010 (sometimes known as ACA, PPACA, or “Obamacare”). The law has 3 primary goals: (a) Make affordable health insurance available to more people. The law provides consumers with subsidies (“premium tax credits”) that lower costs for households with incomes between 100% and 400% of the federal poverty level. (b) Expand the Medicaid program to cover all adults with income below 138% of the federal poverty level. (Not all states have expanded their Medicaid programs.) (c) Support innovative medical care delivery methods designed to lower the costs of health care generally.

Adjusted Gross Income (AGI)

Your total (or “gross”) income for the tax year, minus certain adjustments you’re allowed to take. Adjustments include deductions for conventional IRA contributions, student loan interest, and more. Adjusted gross income appears on IRS Form 1040, line 7. To report expected income on your Marketplace health insurance application, you can start with your most recent year’s adjusted gross income and update it based on income and household changes you expect for the coverage year. The Marketplace uses a different figure, called modified adjusted gross income (MAGI), to determine eligibility for savings. MAGI is not a line on your tax return.

Advanced Premium Tax Credit (APTC)

A tax credit you can take in advance to lower your monthly health insurance payment (or “premium”). When you apply for coverage in the Health Insurance Marketplace, you estimate your expected income for the year. If you qualify for a premium tax credit based on your estimate, you can use any amount of the credit in advance to lower your premium. If at the end of the year you’ve taken more premium tax credit in advance than you’re due based on your final income, you’ll have to pay back the excess when you file your federal tax return. If you’ve taken less than you qualify for, you’ll get the difference back.

Agent & Broker

A trained insurance professional who can help you enroll in an insurance plan. Agents may work for a single insurance company; brokers may represent several companies. You won’t pay anything additional if you enroll with an agent or broker. Agents and brokers must be licensed in their states and have signed agreements to sell plans. In many states, brokers are required to act in a consumer’s best interest. Agents and brokers often get payments (“commissions”) from insurance companies for selling plans. Some may not sell plans of companies they don’t represent.

B

Balance Billing

When a provider bills you for the difference between the provider’s charge and the allowed amount. For example, if the provider’s charge is $100 and the allowed amount is $70, the provider may bill you for the remaining $30. A preferred provider may not balance bill you for covered services.

C

Cafeteria Plan

A cafeteria plan is a separate written healthcare plan maintained by an employer for employees that meets the specific requirements and regulations of Section 125 of the Internal Revenue Code. It provides participants an opportunity to receive certain benefits on a pretax basis. Participants in a cafeteria plan must be permitted to choose among at least one taxable benefit (such as cash) and one qualified benefit.

Catastrophic Coverage

Health plans that meet all of the requirements applicable to other ACA Qualified Health Plans (QHPs) but that don’t cover any benefits other than 3 primary care visits per year before the plan’s deductible is met. The premium amount you pay each month for health care is generally lower than for other QHPs, but the out-of-pocket costs for deductibles, copayments, and coinsurance are generally higher. To qualify for a Catastrophic plan, you must be under 30 years old OR get a “hardship exemption” because the Marketplace determined that you’re unable to afford health coverage.

Centers for Medicare & Medicaid Services (CMS)

The federal agency that runs the Medicare, Medicaid, and Children’s Health Insurance Programs, and the federally facilitated Marketplace. For more information, visit cms.gov.

Children’s Health Insurance Program (CHIP)

Insurance program that provides low-cost health coverage to children in families that earn too much money to qualify for Medicaid but not enough to buy private insurance. In some states, CHIP covers pregnant women. Each state offers CHIP coverage and works closely with its state Medicaid program. You can apply any time. If you qualify, your coverage can begin immediately, any time of year.

Chronic Disease Management

An integrated care approach to managing illness which includes screenings, check-ups, monitoring and coordinating treatment, and patient education. It can improve your quality of life while reducing your health care costs if you have a chronic disease by preventing or minimizing the effects of a disease.

Claim

A request for payment that you or your health care provider submits to your health insurer when you get items or services you think are covered.

COBRA

A federal law that may allow you to temporarily keep health coverage after your employment ends, you lose coverage as a dependent of the covered employee or another qualifying event. If you elect COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage, you pay 100% of the premiums, including the share the employer used to pay, plus a small administrative fee.

 Coinsurance

The percentage of costs of a covered health care service you pay (20%, for example) after you’ve paid your deductible.

Coordination of Benefits

A way to figure out who pays first when 2 or more health insurance plans are responsible for paying the same medical claim.

Copayment

A fixed amount ($20, for example) you pay for a covered health care service after you’ve paid your deductible.

Cost Sharing

The share of costs covered by your insurance that you pay out of your own pocket. This term generally includes deductibles, coinsurance, and copayments, or similar charges, but it doesn’t include premiums, balance billing amounts for non-network providers, or the cost of non-covered services. Cost sharing in Medicaid and CHIP also includes premiums.

Cost Sharing Reduction (CSR)

A discount that lowers the amount you have to pay for deductibles, copayments, and coinsurance. In the Health Insurance Marketplace, cost-sharing reductions are often called “extra savings.” If you qualify, you must enroll in a plan in the Silver category to get the extra savings. When you fill out a Marketplace application, you’ll find out if you qualify for premium tax credits and extra savings. You can use a premium tax credit for a plan in any metal category. But if you qualify for extra savings too, you’ll get those savings only if you pick a Silver plan. If you qualify for cost-sharing reductions, you also have a lower out-of-pocket maximum — the total amount you’d have to pay for covered medical services per year. When you reach your out-of-pocket maximum, your insurance plan covers 100% of all covered services.

Creditable Coverage

Health insurance coverage under any of the following: a group health plan; ACA-compliant individual health insurance; student health insurance; Medicare; Medicaid; CHAMPUS and TRICARE; the Federal Employees Health Benefits Program; Indian Health Service; the Peace Corps; Public Health Plan (any plan established or maintained by a State, the U.S. government, a foreign country); Children’s Health Insurance Program (CHIP); or, a state health insurance high risk pool. If you have prior creditable coverage, it will reduce the length of a pre-existing condition exclusion period under new job-based coverage.

D

Deductible

The amount you pay for covered health care services before your insurance plan starts to pay. With a $2,000 deductible, for example, you pay the first $2,000 of covered services yourself. After you pay your deductible, you usually pay only a copayment or coinsurance for covered services. Your insurance company pays the rest.

Dependent Coverage

Insurance coverage for family members of the policyholder, such as spouses, children, or partners.

Disability

A limit in a range of major life activities. This includes activities like seeing, hearing, walking and tasks like thinking and working. Because different programs may have different disability standards, please check the program you’re interested in for its disability standards. The list of activities mentioned above isn’t exhaustive.

Donut Hole, Medicare Prescription Drug

Most plans with Medicare prescription drug coverage (Part D) have a coverage gap (called a “donut hole”). This means that after you and your drug plan have spent a certain amount of money for covered drugs, you have to pay all costs out-of-pocket for your prescriptions up to a yearly limit. Once you have spent up to the yearly limit, your coverage gap ends and your drug plan helps pay for covered drugs again.

Drug List

A list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits. Also called a formulary.

E

Essential Health Benefits

A set of 10 categories of services health insurance plans must cover under the Affordable Care Act. These include doctors’ services, inpatient and outpatient hospital care, prescription drug coverage, pregnancy and childbirth, mental health services, and more. Some plans cover more services.

Exclusive Provider Organization (EPO)

A managed care plan where services are covered only if you go to doctors, specialists, or hospitals in the plan’s network (except in an emergency).

F

Federal Poverty Level (FPL)

A measure of income issued every year by the Department of Health and Human Services (HHS). Federal poverty levels are used to determine your eligibility for certain programs and benefits, including savings on Marketplace health insurance, and Medicaid and CHIP coverage.

Formulary

A list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits. Also called a drug list.

Fee for Service

A method in which doctors and other health care providers are paid for each service performed. Examples of services include tests and office visits.

G

Grace Period

A short period — usually 90 days — after your monthly health insurance payment is due. If you haven’t made your payment, you may do so during the grace period and avoid losing your health coverage.

Group Health Plan

In general, a health plan offered by an employer or employee organization that provides health coverage to employees and their families.

Guaranteed Issue

A requirement that health plans must permit you to enroll regardless of health status, age, gender, or other factors that might predict the use of health services. Except in some states, guaranteed issue doesn’t limit how much you can be charged if you enroll.

Guaranteed Renewal

A requirement that your health insurance issuer must offer to renew your policy as long as you continue to pay premiums. Except in some states, guaranteed renewal doesn’t limit how much you can be charged if you renew your coverage.

H

Glossary of Insurance & Financial Terms | Dan Rhoads Insurance Agency